1). Mahesh and Ramesh are partners with capital of \( ₹ 50,000 \) and \( ₹ 60,000 \) respectively. On 1st January, 2022, Mahesh gave a loan of \( ₹ 10,000 \) and Ramesh introduced ₹ 20,000 as additional capital. Profit for the year ending 31st March, 2022 was ₹ 15,200. There is no partnership deed. Both Mahesh and Ramesh expect interest @ 10\% p.a. on the loan and additional capital advanced by them. Show how the profit would be divided? Give reasons. [Ans. (i) Interest on loan @ 6\% p.a.for 3 months ₹ 150 be paid; (ii) No interest will be paid on additional capital (iii) Divisible profit is ₹ 15,050; (iv) Each partner's share of profit is ₹ 7,525] \( X \) and \( Y \) are partners in a business with capitals of \( ₹ 80,000 \) and \( ₹ 60,000 \) respectively. The partnership deed provid

Question

1). Mahesh and Ramesh are partners with capital of \( ₹ 50,000 \) and \( ₹ 60,000 \) respectively. On 1st January, 2022, Mahesh gave a loan of \( ₹ 10,000 \) and Ramesh introduced ₹ 20,000 as additional capital. Profit for the year ending 31st March, 2022 was ₹ 15,200. There is no partnership deed. Both Mahesh and Ramesh expect interest @ 10\% p.a. on the loan and additional capital advanced by them. Show how the profit would be divided? Give reasons. [Ans. (i) Interest on loan @ 6\% p.a.for 3 months ₹ 150 be paid; (ii) No interest will be paid on additional capital (iii) Divisible profit is ₹ 15,050; (iv) Each partner's share of profit is ₹ 7,525] (q2)( X \) and \( Y \) are partners in a business with capitals of \( ₹ 80,000 \) and \( ₹ 60,000 \) respectively. The partnership deed provided the followings: (i) X gets a salary of \( ₹ 600 \) per month (ii) Y gets commission of ₹ 5,000 (iii) Interest on capital is allowed @ 10\% p.a. (iv) Interest on drawing is \( X-₹ 500 \) and \( Y-₹ 300 \) (v) Transfer \( ₹ 3,000 \) to Reserve Fund. (vi) Profit be divided in their capital ratio. The profit for the year ending 31st March, 2022 before taking above facts was \( ₹ 49,400 \). Pass necessary journal entries and draw Profit and Loss Appropriation Account. [Ans. Profit \( ₹ 21,000 \) in ratio \( 4: 3 \); X's share of profit is \( ₹ 12,000 \); Y's share \( ₹ 9,000] \)

Answer 1

For the first scenario:

1. Mahesh's capital: ₹50,000 + ₹10,000 (loan) = ₹60,000

2. Ramesh's capital: ₹50,000 + ₹60,000 (capital) = ₹110,000

3. Total capital = ₹60,000 + ₹110,000 = ₹170,000

4. Interest on Mahesh's loan = ₹10,000 * 10% * 3/12 = ₹250 (annually, it's 6% for 3 months)

5. Divisible profit = ₹15,200 - ₹250 = ₹14,950

6. Each partner's share of profit = ₹14,950 / 2 = ₹7,475

For the second scenario:

1. X's capital: ₹80,000

2. Y's capital: ₹60,000

3. X's salary: ₹600 * 12 = ₹7,200

4. Y's commission: ₹5,000

5. Interest on X's capital = ₹80,000 * 10% = ₹8,000

6. Interest on Y's capital = ₹60,000 * 10% = ₹6,000

7. Transfer to Reserve Fund: ₹3,000

8. Divisible profit = ₹49,400 - (X's salary + Y's commission + Interest on X's capital + Interest on Y's capital + Transfer to Reserve Fund) = ₹49,400 - (₹7,200 + ₹5,000 + ₹8,000 + ₹6,000 + ₹3,000) = ₹20,200

9. X's share of profit = ₹20,200 * (₹80,000 / ₹140,000) = ₹11,514.29

10. Y's share of profit = ₹20,200 * (₹60,000 / ₹140,000) = ₹8,685.71

For the journal entries and Profit and Loss Appropriation Account, I'll provide the format. Let's start with the first scenario:

**Journal Entries:**

1. For interest on Mahesh's loan:

   - Debit: Interest on Loan Account

   - Credit: Mahesh's Capital Account

   

**Profit and Loss Appropriation Account:**

| Particulars | Amount (₹) |

|------------------------|------------|

| Profit (before items) | 15,200 |

| Less: Interest on Loan | 150 |

| Divisible Profit | 15,050 |

| Mahesh's Share | 7,525 |

| Ramesh's Share | 7,525 |

Now, let's proceed with the second scenario.

**Journal Entries:**

1. For X's salary:

   - Debit: Salary Account

   - Credit: X's Capital Account

2. For Y's commission:

   - Debit: Commission Expense Account

   - Credit: Y's Capital Account

3. For interest on X's capital:

   - Debit: Interest on X's Capital Account

   - Credit: X's Capital Account

4. For interest on Y's capital:

   - Debit: Interest on Y's Capital Account

   - Credit: Y's Capital Account

5. For transfer to Reserve Fund:

   - Debit: Reserve Fund Account

   - Credit: Profit and Loss Appropriation Account

**Profit and Loss Appropriation Account:**

| Particulars | Amount (₹) |

|------------------------|------------|

| Profit (before items) | 49,400 |

| Less: X's Salary | 7,200 |

| Less: Y's Commission | 5,000 |

| Less: Interest on X's Capital | 8,000 |

| Less: Interest on Y's Capital | 6,000 |

| Less: Transfer to Reserve Fund | 3,000 |

| Divisible Profit | 20,200 |

| X's Share | 11,514.29 |

| Y's Share | 8,685.71 |

These entries and the P&L Appropriation Account reflect the distribution of profits and allocation of expenses as per the partnership deed.